Understanding your home's replacement cost
Here's a statistic that may surprise you: over half of homes in the U.S. are underinsured*. This is largely because home insurance policies are often believed to provide coverage based on a home's market value, as opposed to its replacement cost. Understanding the difference between these two concepts is a key factor in making sure your coverage is up to the high standards of your home.
Replacement cost is essentially the amount it would take to rebuild your home from scratch. This figure includes factors like similar materials and the same degree of craftsmanship. But there are non-material costs to consider as well, such as permits, fees, debris removal, contractor labor, overhead and profit. As a result, a home's replacement cost often (and sometimes greatly) exceeds market value. By making sure your home is insured for its replacement cost, you will be getting the coverage you truly need should you ever suffer a total loss.
* Marshall & Swift/Boeckh
Related resources
Understanding your home's replacement cost
Here's a statistic that may surprise you: over half of homes in the U.S. are underinsured*. This is largely because home insurance policies are often believed to provide coverage based on a home's market value, as opposed to its replacement cost. Understanding the difference between these two concepts is a key factor in making sure your coverage is up to the high standards of your home.
Replacement cost is essentially the amount it would take to rebuild your home from scratch. This figure includes factors like similar materials and the same degree of craftsmanship. But there are non-material costs to consider as well, such as permits, fees, debris removal, contractor labor, overhead and profit. As a result, a home's replacement cost often (and sometimes greatly) exceeds market value. By making sure your home is insured for its replacement cost, you will be getting the coverage you truly need should you ever suffer a total loss.
* Marshall & Swift/Boeckh
Related resources
Understanding your home's replacement cost
Here's a statistic that may surprise you: over half of homes in the U.S. are underinsured*. This is largely because home insurance policies are often believed to provide coverage based on a home's market value, as opposed to its replacement cost. Understanding the difference between these two concepts is a key factor in making sure your coverage is up to the high standards of your home.
Replacement cost is essentially the amount it would take to rebuild your home from scratch. This figure includes factors like similar materials and the same degree of craftsmanship. But there are non-material costs to consider as well, such as permits, fees, debris removal, contractor labor, overhead and profit. As a result, a home's replacement cost often (and sometimes greatly) exceeds market value. By making sure your home is insured for its replacement cost, you will be getting the coverage you truly need should you ever suffer a total loss.
* Marshall & Swift/Boeckh
- Transcript
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Features to consider when calculating replacement cost:
- Exterior features like porches, decks, and breezeways can affect a home's replacement cost.
- Heating and cooling systems can have a big impact on the cost to rebuild a home.
- Roofing material costs vary greatly depending on shingle style and roof style.
- Removing the debris after a loss adds costs not included in new-home construction.
- The quality of kitchen and bath materials could be vastly different from one house to the next.
- The style of garages can vary from house to house.
Related resources
Understanding your home's replacement cost
Here's a statistic that may surprise you: over half of homes in the U.S. are underinsured*. This is largely because home insurance policies are often believed to provide coverage based on a home's market value, as opposed to its replacement cost. Understanding the difference between these two concepts is a key factor in making sure your coverage is up to the high standards of your home.
Replacement cost is essentially the amount it would take to rebuild your home from scratch. This figure includes factors like similar materials and the same degree of craftsmanship. But there are non-material costs to consider as well, such as permits, fees, debris removal, contractor labor, overhead and profit. As a result, a home's replacement cost often (and sometimes greatly) exceeds market value. By making sure your home is insured for its replacement cost, you will be getting the coverage you truly need should you ever suffer a total loss.
* Marshall & Swift/Boeckh